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From Antitrust Law Daily, November 18, 2013

Class action procedures in Sirius XM Radio case will not be scrutinized by Supreme Court

By Jeffrey May, J.D.

The U.S. Supreme Court today refused to consider the procedures followed by the federal district court in New York City in reviewing a class action settlement resolving consumers’ claims that a merger between satellite radio programming providers Sirius and XM had unlawful anticompetitive effects. The Court denied a petition for certiorari, which was filed by an objector to the settlement who had questioned, among other things, the district court’s consideration of racial and gender diversity in assessing class counsel in the case (Martin v. Blessing, Dkt. 13-169).

Left standing is a decision of the U.S. Court of Appeals in New York City (507 Fed. Appx. 1, 2012-2 Trade Cases ¶78,199), affirming approval of the class action settlement. Under the settlement, class members received no compensation; however, Sirius agreed to freeze its prices for five months and to pay class counsel $13 million in attorney fees.

Before the Second Circuit, class member Nicolas Martin objected not only to the settlement terms, but also to Judge Harold Baer’s reliance on race and gender in assessing the adequacy of class counsel. Martin asked the Second Circuit to set aside the settlement as the tainted product of an invalid certification order. The appellate court rejected his challenge to the certification order on standing grounds, concluding that Martin failed to allege injury in fact.

In his petition, Martin asked specifically: “whether an objecting class member whose antitrust claims have been waived by a settlement negotiated by class counsel appointed by a racially conscious class certification order … has standing to challenge the class certification order and, through it, the antitrust settlement.”

According to the petition, Martin should have been allowed to “rely on third-party standing to raise the equal-protection rights of counsel against whom the Diversity Order discriminates on the basis of race.” Moreover, the appellate court should have considered the “class’ interest in being free from the more petty but nonetheless ultra vires micromanagement of the class-counsel relationship” when it concluded that the objector “need[ed] to have suffered ‘actually inferior’ legal services” to establish a cognizable case or controversy.

Justice Alito statement.

In an effort to avoid a misunderstanding of the Court’s denial of the petition, Justice Samuel Alito issued a separate statement, respecting the denial of the petition for certiorari.

“I am hard-pressed to see any ground on which Judge Baer’s practice can be defended,” Alito said. “[I]t is doubtful that the practice in question could survive a constitutional challenge.”

With respect to Federal Rule of Civil Procedure 23, Alito noted that the Rule allowed a district court to consider “any … matter pertinent to counsel’s ability to fairly and adequately represent the interests of the class.” However, he expressed “doubt that this provision can be stretched to justify the practice at issue here.”

“The uniqueness of this practice weighs against review,” according to Alito. However, he cautioned: “If the challenged appointment practice continues and is not addressed by the Court of Appeals, future review may be warranted.”

Chief Justice John Roberts took no part in the consideration or decision of the petition.

Attorneys: Lawrence J. Joseph for Nicolas Martin. Jay W. Eisenhofer (Grant & Eisenhofer PA) for Carl Blessing. Todd Raymond Geremia (Jones Day) for Sirius XM Radio Inc.

Companies: Sirius XM Radio Inc.

MainStory: TopStory Antitrust

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